> And so my prediction is that we will see a reversal to the mean of history, and cryptography become again a govt granted privilege with conditions attached.

Electronic financial transactions (banking, e-commerce,...) and commercial communications are two main reasons we won't see this. Too much impact on the economic levels and the government already have access to this data, so it will be just cons, no pro.

You won't catch bad actors, they will move to illegal services and protocols. I think the voice of reason just prevailed and they realized that it's a bad idea. The only next step I can see is the requirement for data persistence to be done inside the country.